The GSMA has urged the Indian government to work with the telecoms regulator to recalibrate the pricing for 700MHz spectrum after the band went unsold in the massive auction that ended last week.

John Giusti, GSMA’s chief regulatory officer, said the association is concerned that, after the auction, none of the 700MHz band can be used to expand mobile broadband coverage. “The timely deployment of this spectrum will expand the reach of mobile broadband services and deliver positive social and economic benefits to the country’s citizens, creating a truly digital India.”

The spectrum auction ended last week, with bidding hitting $9.8 billion, but 60 per cent of frequencies were left on the shelf. While the strongest interest was in the 1.8 and 2.3GHz bands, there was no interest in the highly efficient 700 and 900MHz bands due to the high reserve prices.

The Indian government had hoped the 700MHz band alone would bring in an estimated INR4 trillion ($60 billion). “As we had cautioned, the spectrum went unsold because the reserve prices for this highly sought-after band were set at an unrealistically high level,” Giusti said.

“High reserve prices inhibit investment or delay deployment in next-generation networks at a time when demand for mobile data is exploding. Regulators should consider the conditions of the local market when setting reserve prices for spectrum auctions. In India mobile operators have been asked to pay some of the highest rates for spectrum compared to other markets, even though it has a low ARPU at about $2.45.”

1.8GHz success
He said the successful sale of licences in the 1.8GHz band is a step in the right direction, helping provide better quality LTE services. “We are confident that this 1.8GHz spectrum will help operators improve coverage gaps, but more spectrum will be needed to address the exponential increase in mobile broadband traffic.”

Mobile operators in many markets, he noted, are struggling to justify the business case for purchasing spectrum at high reserve prices, as proven in India, as well as in the 700MHz auctions in Australia and Senegal.

He urged national governments to reassess their approach to spectrum auction reserve prices after India failed to sell any of its critical 700MHz spectrum.

With the 700MHz band not sold in India, Moody’s noted that Reliance Jio and Reliance Communications — which have a spectrum-and-infrastructure sharing agreement — will remain the only players with access to pan-India spectrum in the sub-1GHz band, which is considered the best suited for 4G services in urban centers, given its better indoor coverage.